PMI & Loan Types

Question 1

Factors that Influence PMI

Answer 1

Size of loan, loan-to-value ratio, borrower’s credit score

Question 2

Loan to Value (LTV) Ratio

Answer 2

Outstanding Loan Amount / Sales Price = LTV

Question 3

PMI typically ranges from __ to ____ of total loan amount

Answer 3

.5%-1.5%

Question 4

Lender must automatically terminate PMI when?

Answer 4

Either when your LTV reaches 78% or at the midpoint of the loan.

Question 5

When can the client request PMI cancellation earlier than when the lender must automatically terminate it?

Answer 5

Once Principal Balance falls to 80% of the original loan value.

Question 6

On what loan type can you NOT remove/terminate PMI?

Answer 6

FHA

Question 7

UFMIP

Answer 7

Upfront Mortgage Insurance Premium

Question 8

FHA Upfront Cost

Answer 8

1.75%

Question 9

FHA Annual Cost

Answer 9

0.8% - 1.05% Annual Mortgage Insurance Premium

Question 10

Factors that affect FHA charges

Answer 10

loan origination amount and LTV ratio

Question 11

VA Upfront Costs

Answer 11

1.25% - 3.3% Funding Fee

Question 12

VA Annual Costs

Answer 12

None

Question 13

Factors that affect VA charges

Answer 13

Type of loan, military category, down payment amount, first or subsequent loan user.

Question 14

USDA Upfront Costs

Answer 14

2% Guarantee Fee

Question 15

USDA Annual Costs

Answer 15

0.5%

Question 16

Factors that affect USDA Charges

Answer 16

None

Question 17

How Often Are PMI and MIP adjusted?

Answer 17

Annually

Question 18

What are PMI and MIP adjustments based on?

Answer 18

Remaining principal balance.

Question 19

Terms of a Conventional Loan

Answer 19

15, 20, & 30 years

Question 20

What is the Required Credit Score for a Conventional Loan?

Answer 20

700+

Question 21

What are the Requirements for a Conventional Loan?

Answer 21

95% Max LTV, at least 5% down payment

Question 22

What are the Terms of a Neighborhood Conventional Loan?

Answer 22

10, 15, 20, & 30 years

Question 23

What are the Requirements for a Neighborhood Conventional Loan?

Answer 23

97% Max LTV, PMI if the LTV is higher than 80%, credit score of 660+, At least 3% Down Payment

Question 24

What is the term for a 5/1 A.R.M. Loan?

Answer 24

30 years

Question 25

What are the Requirements for a 5.1 A.R.M. Loan?

Answer 25

80% Max LTV, 20% Down Payment (at least 10% needs to be from borrower’s own funds), 720+ credit score, may not live in the home more than 5 years.

Question 26

What are the terms of an FHA Loan?

Answer 26

15 and 30 years

Question 27

What are the Requirements for an FHA Loan?

Answer 27

96.5% max. LTV, UFMIP and Annual MIP for all loans, At least 3.5% Down Payment, Credit Score of 600+

Question 28

What are the Requirements for a USDA Rural Development Loan?

Answer 28

102% Max. LTV, Credit score of 640+, No Down Payment Required, Borrower and Property Must be Eligible

Question 29

What is a Down Payment Assistance Program?

Answer 29

Typically offered by nonprofit or government entities to help low-income families cover the costs of a mortgage down payment. Sometimes help with closing costs.